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Fortress says commission order won’t affect Port project

Vince Petrozza speaks as Fortress group made an announcement of a new development called Union Waterfront Condos to replace the stagnated Port Place in Port Dalhousie Wednesday June 29, 2016. Bob Tymczyszyn/St. Catharines Standard/Postmedia Network

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The company behind a massive development in Port Dalhousie says orders by the Financial Services Commission of Ontario against its chief operating officer and mortgage broker won’t affect the project.

“Union Waterfront is one of the marquee projects in our portfolio and we continue to work with all involved to bring this dynamic project to life in Port Dalhousie,” Natasha Alibhai, spokeswoman for Fortress, said in an email Monday.

The Financial Services Commission of Ontario announced Friday it issued orders against eight parties involved in syndicated mortgage investments for real estate development projects for which Fortress Real Developments Inc. was a developer or development consultant.

The commission said in a news release the orders were issued as part of a settlement after a “complex and detailed” investigation.

It said Fortress is not a mortgage brokerage or administrator and is not party to the settlement or the subject of any of the orders.

Four brokerages were ordered to pay a combined total of $1.1 million in penalties on consent, including Building Development and Mortgages Canada Inc., which administers the mortgage on the Union Waterfront property. It was ordered to pay $400,000.

The mortgage brokerage licence of BDMC was revoked, along with that of Fortress COO Vince Petrozza, also on consent. The order requires them to stop all mortgage brokering business immediately.

Alibhai said the settlement and orders involve mortgage brokerages and brokers and Fortress Real Developments is neither — it’s a real estate developer and development consultant.

“Fortress does not believe that the settlement and orders will harm its business and looks forward to continuing success in its real estate development and consulting business,” Alibhai said.

Alibhai said Fortress is not concerned about BDMC’s role with Union Waterfront because BDMC will continue to act as mortgage administrator for existing syndicated mortgage loans. BDMC has voluntarily agreed that those existing syndicated loans in Fortress real estate development projects will be managed by an arm’s-length administrator.

The Financial Services Commission of Ontario said FAAN Mortgage Administrators Inc. will conduct business in BDMC’s name.

The Union Waterfront property is in the heart of Port Dalhousie’s core and is 0.6 hectares bordered by Lock Street, Lakeport Road and Hogan’s Alley.

It’s been the source of multiple development proposals for 14 years.

Fortress Real Development Inc. originally became involved with as a financier when it was still the Port Place project. When that project stalled, Fortress acquired the controversial site in January 2015. Petrozza said at the time that the company was stepping in and taking over the helm of the ship.

Since then, the company has completely redesigned the property, re-marketed it as Union Waterfront and submitted a formal planning application to the city for a mixed-use project.

The property has a site-specific plan attached to it due to an Ontario Municipal Board ruling in February 2009 that was finalized in 2010. That calls for a 17-storey mixed-use building with a maximum 80 apartments, a hotel, theatre and commercial space.

The Fortress proposal calls for a 14-storey terraced building with 220 apartment units. A community space, public courtyard, parkette and 2,084 square metres of commercial space are part of the plan, while the hotel and theatre have been dropped.

A special city council meeting was held in December to listen to public opponents and proponents of the application. The meeting was held at FirstOntario Performing Arts Centre to handle the crowd.

City staff are preparing a report and their recommendation is expected in the spring.

Port Dalhousie Coun. Carlos Garcia said he is concerned about the Financial Services Commission of Ontario news, adding syndicated mortgages are known to be very risky investments.

“I am very concerned,” he said. “Obviously I would like to see the right development there. This project is now with the planning department and we’re waiting to hear what they have to say, but certainly in terms of Fortress modus operandi which involves these syndicated mortgages I would have to think this is pretty significant.”

The Financial Services Commission of Ontario said in a press release that syndicated mortgages investments are considered to be high risk and may not be suitable for the average lender or investor.